Q&A - Home Seller's FAQ's Answered!
Chloe Dertinger | December 5, 2022
Q&A
Chloe Dertinger | December 5, 2022
Q&A
On November 12, 2022, Connect California Homes Realtor Stephanie Hevezi hosted the Savvy Seller’s Seminar in Oakland. She invited a panel of trusted speakers including a mortgage lender, financial advisor, home inspector, title representative, and Connect California Homes Realtor Jenny Shiblaq to answer frequently asked questions about selling and buying a home. Watch the video below or scroll through to have your questions answered!
A: The market is changing. If we are looking strictly at the numbers, technically it is still a seller’s market. We say this because there is under 5-6 months of inventory (number of homes for sale) in our market. Currently, we are at 2.2 months of inventory for buyers, the supply is lower than the demand, therefore we are currently in a seller’s market (November 2022). -Stephanie Hevezi (Realtor at Connect California Homes)
A: When you’re selling, you’re going to have to move somewhere after. So in this market, buyers and sellers both have advantages because even if you’re selling your house, you will be buying another house, which then you’ll be able to negotiate and keep contingencies in place. Before, sellers were kind of scared to sell because they knew they weren’t going to be in the best buyer pool. -Jenna Gray (Lender at Guaranteed Rate Mortgages)
A: It’s more of a healthy market. A year ago, it didn’t feel great. I represented a lot of buyers and a seller could just open up their house and say “Here it is! You know what this is, come spend your money.” It was great to have listings on that, but the buyers that are coming out now are much more serious because they may have been in that market and been really burned by putting offers in repeatedly and getting pushed away. I feel like there's still a lot of those buyers that didn’t get in a house and are now coming back very motivated to buy. -Jenny Shiblaq (Realtor at Connect California Homes)
A: When you’re looking to buy or sell, most people first think to talk to a realtor. When you’re thinking about selling your home, the process should start with a financial advisor and that’s because we really want to understand the context of why you’re buying/selling to make better decisions along that path. There could be a variety of reasons why you’re moving, however, your life may look different after this transition. Financial advisors look at cost analysis before you sell. How much will it cost to prep the house? Costs may be related to staging, improvements, and deposits. The question is, where is that money going to come from? If you have to pull money out of investments or retirement accounts, it is important to know whether that money will be taxed. Even after you sell, financial advisors can help with fully understanding your budget and managing the costs of moving. This might include a down payment on a new home, closing costs, or rent. There are many areas of money transferring throughout this process that a financial advisor can help you organize. -Dustin Ma (Financial Advisor at Accredited Investment Fiduciary)
A: Think about your home selling process in the case of three financial scenarios: what is your best scenario, what is your worst scenario, and what’s your average scenario? As long as you’re content with any one of those, the next step would be to talk with a realtor or a lender. If you’re not content with accepting any of those scenarios, we will need to readjust the scenarios and make sure there is a reasonable profile risk. -Dustin Ma (Financial Advisor at Accredited Investment Fiduciary)
A: Yes to both. The reason why I, as a lender, say it is a buyers market is because I am on that side of the transaction. Right now, sellers are giving concessions towards closing costs and coming up with creative ways to make their properties stand out. We have a more normalized market than we did 9-12 months ago so as a buyer you’re able to maybe keep your contingencies in place, negotiate with the seller so that it’s mutually beneficial, or get concessions towards your closing costs. Right now, there is more opportunity to get a mutually beneficial deal. -Jenna Gray (Lender at Guaranteed Rate Mortgages)
A: I sit down with my clients and I have a very lengthy conversation and one of the biggest shifts is that 9 months ago we had buyers that would put in offers hundreds of thousands over asking because mortgage rates were much lower; they felt much more comfortable paying more for a property. Now, rates are much higher, and although home prices have lowered, buyers are not willing to pay the 6-7% interest rate for a house that is more affordable. This is how I explain current buyer psychology, however, buyers are still able to refinance once rates go down and potentially save hundreds or thousands of dollars on their mortgage payments. Regardless of interest rates, the price of the house will always remain the same. -Jenna Gray (Lender at Guaranteed Rate Mortgages)
A: I have clients who bought their first home and rates were 13-18% but they could afford the monthly payment. If your monthly payment is not negatively impacting your life financially, mortgage rates shouldn’t be an important factor if you’re able to comfortably afford it. -Jenna Gray (Lender at Guaranteed Rate Mortgages)
A: 100% of the contracts I have for my clients right now are seller’s concessions. Buyers are using these concessions to cover closing costs, buydown, and there is also something called a temporary buydown. Essentially, this is where you have your note rate, let’s say it’s 7%, then in year one, your rate is 5%, in year two, your rate is 6%, and years 3-30, it goes back up to the note rate, 7%. Most of us believe that when inflation gets under control, we will see rates come down. Therefore, if these buyers qualify, they will be able to refinance their loan at a lower interest rate. Using a temporary buydown is a great strategy in this market for short-term and long-term planning. -Jenna Gray (Lender at Guaranteed Rate Mortgages)
A: What we are seeing currently is that buyers are coming ready to move into a new home. They’re not really looking for fixer-uppers; they don’t want to come in and do a lot of work. I like to help my seller’s prepare their home. I get inspections lined up and what we like to do is make sure that the seller’s process is as seamless as possible to get to market. Something we see buyers are really looking for is a fresh coat of paint and some carpet replacement. -Jenny Shiblaq (Realtor at Connect California Homes)
A: Today’s buyers are usually aged 30–40 years old. A lot of them work in the area or are coming from the Peninsula or the city; they’re typically looking for more room than what they’re getting over there. With the pandemic, we all realized even with a large house, your home can still feel really small, so lots of people are looking for space to work or more space to feel less cluttered in their home. -Jenny Shiblaq (Realtor at Connect California Homes)
A: A couple years ago, you’d walk into a house and everything was really gray. Now, we’re definitely shifting back to warmer tones. More than anything, people just want the home to look clean. We’re seeing a lot of white walls to create a “light and bright” feel with lots of natural lighting. -Jenny Shiblaq (Realtor at Connect California Homes)
A: At Connect California Homes, we bring stagers in at our cost. What our stagers do is walk through your home and look at it through the eyes of a buyer but also the camera. 100% of buyers who are coming through your house have looked at it online first. When the photographers come through, we want your home to be seen in its best light and that’s what we put online for the potential buyers to see. Our stager recommends getting as much clutter and furniture out of your home as possible. They will fill your home with furniture and decor that’s current and makes your home look the best it can for the eyes of the camera and potential buyers. -Jenny Shiblaq (Realtor at Connect California Homes)
A: Our stager is sometimes able to use the best parts of your home (furniture, decor, etc.), so you’re still able to maintain the style of your home, she just knows how to enhance it. Usually, most of your belongings will be tucked away in the garage. -Stephanie Hevezi (Realtor at Connect California Homes)
A: It’s really important if you’re staying in your home that your realtor and stager knows you have to live there. So, the day of photography, we may ask you to take your coffee machine down and that kind of stuff, but the rest of the time you can live in the staging. Our stager will be beautiful bedding on your bed, but at night, you’d just take it off and sleep in your own bedding. She is really great at taking a piece of furniture or item in our sellers home and using it as inspiration for staging the rest of the home. It’s really important to us that when you are selling your home it is a comfortable process for you, as comfortable as it can be, because it is really uncomfortable. -Jenny Shiblaq (Realtor at Connect California Homes)
A: There are a lot of hidden aspects that you’re not going to think about at first: photography, staging, packing, lawn-service, landscaping, and home improvements. Generally, home improvements are out of your pocket, but on our team we feel that photography and staging are part of our service, so we include that at no cost to you. You want to make sure that the realtor you choose is well-connected, has a good network of resources and vendors to direct you, and is personally there to manage these processes to make sure all the necessary work is done before your home is put on market. Our team will never send someone into a home that’s a stranger. If stagers, inspectors, or painters come into your home, they are people that we regularly work with and trust to do a great job. -Jenny Shiblaq (Realtor at Connect California Homes)
A: As a seller, you need to be very mindful of who you work with. You won’t sell a home by putting up a sign and hoping people put in offers. You will need to find a real estate agent that will be creative, able to find solutions, and have a team that will help attract and procure the right buyer. -Stephanie Hevezi (Realtor at Connect California Homes)
A: Over time, things in your home will naturally begin to break down and need repair. By working with a home inspector, you may find that your home needs more repairs than you were aware of. There are several types of inspections we perform. One is the termite/pest inspection, where we look at everything structurally, not just for bugs, but also damage and leaks. Our home inspection reports look at everything from your appliances, HVAC, the doors, and windows. I would recommend getting all your inspections done. I had a situation a few years back where I bought a house and it was on a septic. I had never lived with one of those before. The seller assured me that the septic’s in great shape, but I got an inspection done, and the septic was completely shot and it cost him almost $40K to repair. Inspections are really important to understand what repairs are needed and how much they will cost which will help you gauge how much money you’ll take away from selling your home. -Cody Wallace (Home Inspector at Brother’s Inspections)
A: Knowing the repairs you need ahead of time is a part of disclosure on your home as a seller. If you know about something, and you disclose it, the repair might be a negotiable item. Every item in the inspection has a dollar value, as a realtor, we know this amount and can present it to the buyer and the buyer will be able to say “Well, we really love this house but could you take care of items 1, 7, and 10” so it ends up being part of the negotiation. -Jenny Shiblaq (Realtor at Connect California Homes)
A: Getting an inspection is a part of liability. If you end up selling your home, and you don’t get an inspection but you know about things in your home that need fixing, down the line the buyer can come back to you and ask why it wasn’t disclosed. Sellers must disclose everything they are aware of. -Jenna Gray (Lender at Guaranteed Rate Mortgages)
A: Depending on how many inspections you get, the cost varies. The termite inspection, assuming your home is less than 2,000 sqft, is around $300, a general home inspection is around $500, and a roof inspection is about $125. It’s kind of an upfront cost, but it puts you in the driver's seat of which repair decisions you want to make. -Cody Wallace (Home Inspector at Brother’s Inspections)
A: A general inspection will look at everything and point out issues, it doesn’t really look to correct anything. During a termite inspection, we break this down into three different sections. Section one is active termites or active fungus damage. Section two items are general homeowner notes; things to keep an eye on that could turn into section one. This may include leaks that haven’t caused any damage yet or gutters that aren’t draining properly. Section three includes things that can’t be fully seen or something that may need to be investigated further such as a water stain on a ceiling. -Cody Wallace (Home Inspector at Brother’s Inspections)
A: A pre-sale escrow is when a listing agent opens the escrow with us. It’s a great tool to get ahead in the game and look for potential encumbrances. We pull the preliminary report and see what encumbrances are on the property, we look if there is anything unusual or unexpected. If the sale is due to a death in the family and the home is not in the trust, that is going to be a probate situation and can take usually up to 30-90 days but in some cases up to six months. A pre-sale escrow is just another step before the house is fully ready to be sold. What we find is that the majority of listing agents will call and open a pre-sale escrow because they want to take advantage of what the valuation is going to be. When a buyer comes along, the pre-sale escrow becomes a negotiable item, so it’s not always the case that the escrow will stay with the company that opened it because it’s customary that the buyer pays the title and escrow fees, and because they do that they get the choice of where to have the escrow. So, it makes it a little wonky in some cases, but really strong agents are usually able to keep that escrow with us so that the process is not delayed. If there is a probate situation involved, most agents representing buyers are not going to come in and try to move the escrow because they know they would be starting from scratch again. Anything that had been done prior to the pending sale would be usable with our title company only. -(Title Representative)
A: When we prepare a preliminary report, that’s basically our offer saying we will provide title insurance on a property. We also show any liens that are on the property, we will learn about any easements which are a really nice thing for areas such as Oakland, because most homes aren't all cookie cutter type properties. The preliminary report breaks down any easements and can provide color-coded maps that show the buyers where all the easements on the property might be. -(Title Representative)
A: They are free, nobody pays for it, but we also can’t provide a preliminary report just because. You would have to open an escrow and then the next process would be to start researching the preliminary report. It does cost us money, but we don’t forward it on to the seller. -(Title Representative)
A: A seller would pay a document transfer fee, and that is generally about $0.55 per $500, so around $2,000 on a $2,000,000 home. Seller’s typically aren’t responsible for very many fees unless you are doing your inspections and all that. As far as title and escrow is concerned, really just paying the document transfer fee, and that goes to the county, not us. City transfer taxes vary based on where you live. -(Title Representative)
A: In Oakland, it is customary for the city tax to be split between buyer and seller. However, it is always a negotiation point. If you as a seller are especially motivated and want to attract a buyer, that could be a concession that you make. -Stephanie Hevezi (Realtor at Connect California Homes)
A: If your property is held in a trust and you are preparing to sell it, if you don’t already have a bank account in the name of your trust, by the time that the escrow closes you will need that because we are only allowed to disburse funds to the owner of the house. That’s something that gets missed a lot because most people don’t write their checks in the name of their trust so they don’t think of having a bank account with the same name. Also, oftentimes the trust is set up after you purchase a property, so until you go to sell that you may have not considered having a bank account in that name. It is not a super challenging thing, and can be done in a day, but it is something I like to mention up front especially if your agents understand that your home is held in a trust. -(Title Representative)
A: Get a trust. Especially in California, the Bay Area, if you have assets valued over $250,000 and you pass away, all of your assets are probatable and it is based on the value of your house and not your equity. People forget that not only are your assets deeded in the trust, it is also listed in the trust. If you sell that asset, you want to make sure to update your trust to reflect that. -Dustin Ma (Financial Advisor at Accredited Investment Fiduciary)
A: Prop-19 took effect in April 2021. It applies to homeowners and sellers over the age of 55 and/or those who have severe disabilities and/or those who are victims of natural disasters. It allows you to transfer your primary residence, not your rental property, not your second home, but your primary residence into a new home. You can buy down, buy equal, or buy up, and whatever your existing tax base was comes with you into your new purchase. This needs to be done within two years of the sale of your primary residence, it applies anywhere in the state of California, and you can do this up to three times in your lifetime. -Stephanie Hevezi (Realtor at Connect California Homes)
A: Just doing an upgrade can trigger a reassessment. However, if you qualify as a necessary repair, such as remodeling the kitchen and finding water damage, document it, take pictures of it, because that can help mitigate an increase in property takes. -Dustin Ma (Financial Advisor at Accredited Investment Fiduciary)
A: The way primary residence taxes work, if you are single, the first $250,000 of profits on your property are tax free, if you’re married it’s $500,000. Anything above and beyond that will be taxed at capital gains rates. For example, you buy your house for $1,000,000 and it appreciates to $1.6M ($600,000 in profits). If you’re married, the first $500K is tax free, and the remaining $100K is taxed at capital gains rates. Capital gains rates vary depending on how much money you make and the value of the property. However, in order to receive this capital gains exemption, you must live in the house the last two of the last five years as your primary residence. If it’s three years, you’ve lost it, so you really want to be strategic. -Dustin Ma (Financial Advisor at Accredited Investment Fiduciary)
A: One, you can always sell your house for less, but nobody wants to do that. Another way is to raise what’s called a cost basis. So even though you bought it in a lien, over the years you’ve had the house you may have done improvements or add-ons. It is important to keep all those receipts because your accountant can help you add all of those expenses and raise your cost basis. -Dustin Ma (Financial Advisor at Accredited Investment Fiduciary)
A: We just had a similar situation where there was a lot that had to happen to the house. We didn’t do all the repairs and renovations, but we did some of the things. We painted, we replaced some of the flooring but not all of it. There are some things in this market that aren’t worth the investment. If you know someone is going to come in wanting to fix the home, then don’t bother. It’s an evaluation, really. -Jenny Shiblaq (Realtor at Connect California Homes)
A: Even if you don’t get a dollar for dollar return, your house will be more marketable with renovations. It will be more attractive to the buyer and sell much easier. The fact that you have equity is a good place to start, it means you have options -Dustin Ma (Financial Advisor at Accredited Investment Fiduciary)
A: You might have some damage on the outside of the home that you can see, but then you have a contractor come in and start opening stuff up and find more issues, which can up your renovation price as well. There are a lot of things that go into it. -Cody Wallace (Home Inspector at Brother’s Inspections)
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